Imperial Oil posts loss on northern gas writedowns

ENERGY

CALGARY • Gains f rom higher oil prices and refinery margins were more than offset by asset impairment charges from abandoned natural gas projects as Imperial Oil

Ltd. reported choppy fourthquarter results on Friday.

The c ompa ny took a charge of $ 289 million on its northern B.C. Horn River shale gas development, a 5050 venture with its U. S. parent, Exxon Mobil Corp., citing an assessment of its “relative competitiveness.”

The project was once expected to become a major supply source for B.C.’s lique- fied natural gas export industry, but no LNG projects have been built.

Imperial spokeswoman Lisa Schmidt said Friday the company has decided not to proceed although it still has about 82,000 hectares of drilling rights in the area, down from 136,000 hectares after some Crown leases were allowed to expire in 2016.

The partners drilled a successful horizontal well there in 2012 that averaged 30 million cubic feet per day of gas but suspended it in 2015 as natural gas prices fell to 16-year lows.

Imperial also recorded a $ 277- million charge on the Mackenzie natural gas pipe- line project in the Northwest Territories it cancelled late last year. That project had won regulatory approval in 2010, but its economic prospects were also hampered by low gas prices.

The charges left the firm with a net loss of $ 137 million or 16 cents per share for the last three months of 2017. That compared with net income of $1.44 billion or $ 1.70 per share in the same period of 2016, boosted by a $988-million gain on the sale of its chain of Esso stations.

Production at the under- performing Kearl oilsands mine in northern Alberta averaged 176,000 barrels per day in the fourth quarter (125,000 bpd net to Imperial, 51,000 bpd to partner Exxon Mobil), up from 169,000 bpd in the fourth quarter of 2016, the company said. It added operating expenses at the project also grew by about $50 million.

The company reiterated its plan to spend $400 million to increase Kearl’s average gross production to 240,000 bpd by the end of 2019.